Murdoch's vicious attacks on Rudd: it's business

By Paul Sheehan

The arrival of Col Allan in Australia is making a lot of people uneasy.

Allan is a man widely known inside News Corporation as Col Pot, a play on the name of a Cambodian genocidal dictator.

Rupert Murdoch: "Australian public now totally disgusted with Labor Party wrecking country with its sordid intrigues. Now for a quick election."Credit:Getty Images

He is News Corp's most feared flamethrower in a company of flamethrowers and he has been sent to Australia by Rupert Murdoch himself. The purpose of his mission has become clear in recent days. One person who should rightly be disconcerted by Allan's sudden secondment to Australia is the head of News Corporation Australia, Kim Williams. Several other executives should also be leery, but they are not Allan's primary target.

His primary target is Kevin Rudd.

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Monday's cover of the Daily Telegraph.

Why Murdoch wants Rudd to lose the coming federal election is not merely political, it is commercial. News Corp hates the government's National Broadband Network (NBN). The company has formed a view that it poses a threat to the business model of by far its most important asset in Australia, the Foxtel cable TV monopoly it jointly owns with Telstra.

Murdoch has declared war on Rudd by dispatching his most trusted field general, Allan, whose reputation is built on his closeness to Murdoch and his long history of producing pungent front-page splashes and pugnacious campaigns as editor-in-chief of The Daily Telegraph and, for the past 12 years, The New York Post.

Allan's mission is to help consign Rudd to the dustbin of history reserved for failed leaders.

The ramp-up of the war effort has been rapid and intense.

Friday, July 26: the chief executive of News Corp, Robert Thomson, announced in New York that Allan would be returning to Australia to provide ''extra editorial leadership for our papers …''.

Monday, July 29: Allan is at work in Australia within 72 hours of the announcement.

Tuesday, July 30: he begins several days of meeting with editors. The message is simple and brutal: you have been going hard on Labor but now, with Rudd's revival in the opinion polls, you have to go harder.

Wednesday, July 31: he is reported as lunching with Lachlan Murdoch and other executives.

Friday, August 2: The Daily Telegraph depicts Rudd in a hoodie escaping from a bank he has just robbed, with the headline: ''Rudd's $733m hoist on people's savings''.

Yesterday, August 3, The Australian runs four negative headlines about the Rudd government on its front page alone, including ''Revealed: How Rudd blew $250bn''. The Daily Telegraph splashes with a front-page banner headline: ''Price of Labor - another huge budget shambles … and now we're $30bn in the red''. In Melbourne, the Herald-Sun took out page one with ''It's a ruddy mess''.

Rudd is a broad target. His own parliamentary colleagues could not stomach him and removed him from office after less than three years. After he rose like Lazarus to return as Prime Minister on June 26, one third of the cabinet departed rather than serve with him. His election-eve policy reversal on asylum-seekers was spectacular. His Papua New Guinea detention strategy was exposed as a bluff.

On June 26, Rupert Murdoch used Twitter to write: ''Australian public now totally disgusted with Labor Party wrecking country with it's sordid intrigues. Now for a quick election.'' Rudd's greatest failing, in the eyes of News Corp management, and the greatest threat he poses, is his $45+ billion NBN, a massive project announced without any serious costing. News Corp views this as a threat to the business model of its most important Australian asset, Foxtel, jointly owned with Telstra.

The company much prefers the Coalition's less costly but also less ambitious national broadband strategy. News Corp newspapers have reported the numerous failings and cost-over-runs of the NBN in hundreds of stories.

Although the Coalition's alternative is less costly, it offers an inferior capacity for downloading content at a time when consumer demand is shifting dramatically towards content-on-demand and content via computers.

This shift is reflected in the enormous run-up in the shares of the market leader in content-on-demand, Netflix. Shares in Netflix closed at $US246 (A$276) in New York on Friday, a prodigious run-up from its $52 price a year ago. Netflix now has a market valuation of $US14.5billion compared with $3 billion a year ago.

Foxtel has responded to this threat by launching its own content-on-demand product, FoxtelGo, and is launching an online-only version, FoxtelPlay.

Foxtel's co-parent, News Corp, is engaging in a more structural response.